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US Senate confirmed Janet Yellen as next Chairperson of Federal Reserve

Jan 7, 2014 13:13 IST

The US Senate on 6 January 2014 confirmed the name of Janet Yellen as the first woman to lead the US Federal Reserve. With this confirmation, the Senate has elevated an advocate to fight unemployment and a backer of the Central Bank’s efforts to spur the economy with low interest rates and massive bond purchases.

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She succeeds the Chairman Ben Bernanke as the next head of America’s central bank. Ben Bernanke is stepping down after serving as the Chairman of Federal Bank for eight years, which was dominated by the Great Recession and the efforts of the bank to combat it. Her term in the office will begin on 1 February 2014. Her appointment marks an important shift in the direction of the efforts of the bank’s policies as the monetary policy of past 5 years have resulted in fed pouring about 3.8 trillion dollars into the US economy leading to the financial crisis.

Yellen aged 67 was voted by the senators with a margin of 56-26 on her name and numerous of absences, which was caused due to delays in the flights due to arctic temperatures around America.

45 Democrats and 11 Republicans voted for the name of Yellen, who has been the Vice-chair of the Bank, since 2010. The 26 votes, which were casted against her name was done by Republicans. Her term as the leader of the Century old bank will be four years from the date of her joining.

The Federal Bank under Bernanke has driven short term interest rates down to near zero and flushed money into the economy with huge bond purchases. It’s expected that Yellen, the strong ally of Bernanke who has supported these policies will continue until some concrete signs does not emerge to sustain improvement of the economy as well the job market.

• Yellen has headed the Federal Reserve Bank of San Francisco
• She has chaired the Council of Economic Advisers of the former President of US, Bill Clinton
• She has been an economics professor at the University of California at Berkeley
• Yellen was one of the first person to warn in 2007 warned US about the damage of its entire economy

Earlier in December 2013, Federal Bank announced that it will gradually reduce its 85 billion dollar in monthly bond purchase by trimming them back to initially 75 billion dollar in the month and will take further measured steps as the economic conditions improve. The bank’s holdings reached to 4 trillion dollar, which was four times to the level of before US was hit by the financial crisis in 2008. The Great Recession ended in June 2009 by modest growth in the economy of the country, which has seen signs of encouragement in past few months.

Apart from it, the unemployment of US has fallen to 7 percent in December 2013 from its recent peak level of 10 percent in October 2009. US has seen an average 200000 jobs monthly Since August and its economy has grown at an annual rate of 4.1 percent from July 2013 through September 2013.

Federal Reserve Board Mission  
The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.

Today, the Federal Reserve's duties fall into four general areas
• Conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
• Supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers
• Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
• Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system

Federal Reserve Districts

As soon as practicable, the Secretary of the Treasury, the Secretary of Agriculture and the Comptroller of the Currency, acts as the Reserve Bank Organization Committee. The committee shall designate not less than eight or more than twelve cities to be known as Federal Reserve cities, and shall divide the continental United States, excluding Alaska, into districts, each district to contain only one of such Federal Reserve cities. The determination of said organization committee shall not be subject to review except by the Board of Governors of the Federal Reserve System when organized: Provided, That the districts shall be apportioned with due regard to the convenience and customary course of business and shall not necessarily be coterminous with any State or States. The districts thus created may be readjusted and new districts may from time to time be created by the Board of Governors of the Federal Reserve System, not to exceed twelve in all.

Janet Yellen Nominated as Head of US Federal Reserve Board

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Read more Current Affairs on: US Senate , Janet Yellen , US Federal Reserve

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